The cushion the United States keeps for oil emergencies is running thinner than it has in nearly 40 years. New government figures released Wednesday by the Energy Information Administration (EIA) showed the Strategic Petroleum Reserve (SPR) fell by roughly 8 million barrels in the week ending May 29, dropping to 357.1 million barrels. That was the sixth straight weekly decline and leaves the reserve approaching its lowest level in almost four decades.

The reserve is the country’s backup oil supply — crude stored in underground salt caverns along the Gulf Coast that the government can tap when normal supplies are disrupted. It was created after the oil shocks of the 1970s to protect the economy during supply emergencies. Today, it is being drawn down at one of the fastest rates in its history.

The reason is straightforward. Since the war with Iran began on February 28, shipping through the Strait of Hormuz — the narrow waterway that previously carried about 20% of the world’s oil supply — has remained sharply reduced. To offset the impact on global energy markets and help contain fuel costs, the Department of Energy has been releasing crude from the SPR.

The government is currently in the process of releasing approximately 172 million barrels, part of a broader effort coordinated with allied nations to place nearly 400 million barrels of additional oil onto world markets.

The numbers are significant. The reserve has lost more than 50 million barrels since the conflict began. Patrick De Haan, head of petroleum analysis at GasBuddy, has warned that the SPR is approaching levels not seen since the early 1980s, when the reserve was still being built.

The drawdown extends beyond government inventories. According to the EIA, commercial crude oil inventories fell by approximately 8 million barrels during the same week, dropping to 433.7 million barrels, about 3% below the seasonal average.

Ole S. Hansen, Head of Commodity Strategy at Saxo Bank, noted that combined government and commercial crude inventories have declined by roughly 90 million barrels from recent highs, including a drop of approximately 16 million barrels in a single week.

Particular attention is being paid to Cushing, Oklahoma, the key storage hub used for pricing West Texas Intermediate (WTI) crude oil. Inventories there have fallen from roughly 33 million barrels two months ago to approximately 24.5 million barrels, approaching levels that analysts say could create logistical constraints for pipeline and storage operations.

For now, the reserve releases appear to be working. Oil prices remain elevated but have avoided the extreme spikes many analysts feared when the conflict began.

Brent crude, the global benchmark, traded near $97 per barrel on Thursday, while WTI crude hovered around $95 per barrel. Although both remain well above year-ago levels, prices are far below some of the most pessimistic forecasts that envisioned oil surging toward $200 per barrel.

That outcome has led some energy executives to warn that the market’s protective buffers are being depleted.

Mike Wirth, Chairman and Chief Executive Officer of Chevron, cautioned last week that energy prices could face renewed upward pressure if supply disruptions continue and inventory cushions shrink further. His concern is simple: emergency stockpiles can stabilize markets, but only while supplies remain available.

For consumers, the implications extend well beyond gasoline. Higher crude prices affect diesel fuel, which powers much of the nation’s trucking, rail, shipping, construction, and agricultural sectors. As transportation costs rise, they can eventually flow through to the prices businesses and households pay for everyday goods.

The reserve was created to protect the country during major supply disruptions. The more crude that is released today, the less remains available if a larger shock emerges tomorrow.

With fighting between the United States and Iran continuing and uncertainty surrounding shipping through the Strait of Hormuz, energy markets remain focused on one key question: whether diplomacy can restore normal oil flows before emergency stockpiles fall further.

President Donald Trump said this week that Iran had agreed not to pursue a nuclear weapon and suggested a broader agreement could be reached soon. If shipping through Hormuz returns to normal, pressure on global supplies could ease and emergency releases may slow. If negotiations falter, the Strategic Petroleum Reserve could continue its decline toward levels not seen in nearly 40 years.

For businesses, investors, and consumers alike, the message is straightforward: the emergency buffer that has helped contain fuel prices is shrinking, and the next move in energy costs may depend as much on diplomacy as on oil production.

Markets & Energy — JBizNews Desk

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